China deals would leave Canada a resource colony: opponents

China deals would leave Canada a resource colony: opponents

Foreign ownership review needs flexibility: ex-ambassador

Canada needs to maintain some flexibility in the way it reviews foreign takeovers to prevent the rules from turning into a yes-no algorithm open to abuse by companies gaming the system, says a former Canadian ambassador to China.
Howard Balloch, now chairman of investment firm Canaccord Genuity Asia, says while the current rules, which have been widely criticized for their lack of clarity, need to be improved, the government needs to keep some room to manoeuvre.

“I would be surprised if that in doing so that they remove all flexibility,” he said of the current review of the Investment Canada Act guidelines.

A report has suggested that Canada is looking at a possible two-track review system, one for typical companies and a second for state-owned companies.

The concern is the amount of influence a government may or may not have over the operations of state-owned companies.
“I think there is a tendency to see a state-owned company from China differently than a state-owned company from France or Norway,” Balloch said.
But Balloch, who served as ambassador to China from 1996 to 2001, noted CNOOC and Nexen have made several commitments in hopes of winning approval, including a pledge to maintain the head office in Calgary and seek a Toronto Stock Exchange listing.

CNOOC has also committed to place some $8 billion of its assets under the control of Nexen’s management in Canada as well as to carry on Nexen’s social responsibility programs in Canada and around the world.
“From what I’ve seen CNOOC and Nexen have gone out of their way to show it is in the national interest,” Balloch said.

Concerns about CNOOC’s bid for Nexen have come from several corners including Prime Minister Stephen Harper, who has said the deal “raises a range of difficult policy questions.” At a news conference in Senegal earlier this month, he said there’s a national security angle that factors into Canada’s relationship with China. – The Canadian Press

By Heather Scoffield

OTTAWA — A New Democrat government would do everything in its power to extricate Canada from a controversial and imminent investment treaty with China if it turns out the agreement isn’t in the best interests of Canadians, says leader Tom Mulcair.

Critics say the Foreign Investment Promotion and Protection Agreement would turn Canada into little more than a “resource colony” and is poised to be ratified despite almost no parliamentary debate.

Mulcair, speaking after question period Tuesday, said an NDP government would find a way to get out from under the deal after the next federal election in 2015 if closer inspection revealed it wasn’t in Canada’s best interests.

“You can sign into an agreement and then you can remove yourself from the agreement. That’s what successive governments can do,” Mulcair said.

“We’re not going to be bound for the next 30 years by an agreement that hasn’t even been studied, that would make our court system take the interests of foreign investors and foreign companies pass above the interests of Canadians, the interests of our environment, the interests of our rights.”

Bolstered by more than 60,000 signatures on petitions and a precision-targeted letter-writing campaign led by activists, the NDP, Liberals and Green party Leader Elizabeth May began a last-minute push Tuesday for a fuller debate on the agreement.

“China is just as important as the United States and we should really be treating this treaty with just the same level of public scrutiny and debate as NAFTA,” said Matthew Carroll, campaigns director for Leadnow.ca, an advocacy group that organized the petition and has flooded MPs with emails and letters.

Canada and China signed the agreement at the beginning of September, and the government tabled it in the House of Commons near the end of that month. Under new rules set by the Conservatives, the agreement must be before Parliament for 21 sitting days before it can be ratified.

That time runs out on Thursday. After that, the cabinet needs to sign off on it through an order-in-council. It’s not an automatic process, but the Conservatives have given every indication that ratification is imminent.

The agreement comes into force when both countries have ratified it.

“With this agreement, our government is bringing to Canadian investors the protection and predictability to invest with confidence in China, the world’s second largest economy,” Rudy Husny, a spokesman for International Trade Minister Ed Fast, said in a statement when asked if the government would be willing to hold off on ratification to allow for more debate.

The agreement has been 18 years in the making and is a replica of many other foreign investment protection agreements Canada has with its trading partners, he said.

The opposition has had ample opportunity to examine the China deal, but chose to use its four opposition days in Parliament on other subjects, he added. Plus, government officials have briefed MPs on the deal, he said.

“The NDP and the Liberals are simply misleading Canadians.”

Mulcair, however, insisted that it’s up to the government to decide whether the treaty is held up for proper scrutiny.

“They’re trying to shove it down Canadians’ throat without proper analysis,” he said. “They’re the government. They control the agenda in Parliament. If they’re serious, if they’re sincere, they’ll provide Canadians time to study this deal and find out what’s in it.”

Critics say the deal should have gone before parliamentary committees to be examined by experts for its implications as well as for flaws and weaknesses.

“We have a government that is refusing normal, democratic process,” said NDP industry critic Peter Julian.

May argues that the deal would give Chinese corporations — and the government that owns them — new powers to influence Canadian policy, not just in terms of investment and industrial development, but also in the realms of environment and health.

And since Canada is clearly the junior partner in the trading relationship, Canadian governments at all levels will have little choice but to cater to the whims of a China desperate for natural resources, she said.

“We become the resource colony in that context,” said May.

As of the end of 2011, Chinese direct investment in Canada totalled $10.9 billion, while Canadian investment in China was $4.5 billion.

Canadian business has long complained that the investment climate in China is too uncertain to warrant major increases in investment and has repeatedly urged Ottawa to sign a deal to ensure Canadian interests are treated just like other investors in China.

But the investment agreement is going through the procedural hoops in Ottawa at a sensitive time in the Canada-China business relationship. The government is in the midst of deciding whether to approve the proposed $15.1-billion takeover of Calgary-based Nexen Inc., by the China National Offshore Oil Corp.

Industry Canada has until Nov. 11 to say whether it believes the takeover is in the country’s best interests — a deadline that could be extended if both Ottawa and CNOOC agree.

The CNOOC deal and the foreign investment pact are separate processes, but the federal government faces similar criticisms in its handling of both: that they have not been subject to public scrutiny and that Ottawa risks giving up too much power to the Chinese government.

Indeed, Leadnow.ca addresses both processes in the same breath: “Stop the Canada-China FIPA investment deal and Nexen takeover,” the group’s petition urges.

“These agreements would pave the way for a massive natural-resource buyout and allow foreign corporations to sue the Canadian government in secret tribunals.”